Index

A statistical measure made up of a group of securities considered to represent a particular market or sector. There are different indices for almost every sector of the financial markets and economy. Each index has its own calculation methodology and is usually weighted to ensure it provides an accurate snapshot of the sector or market it is measuring. For example, the FTSE 100 index is weighted according to market capitalization while the Dow Jones Industrial Average is weighted for price. These are often used as benchmarks to gauge how well different portfolios are performing.